No. of Recommendations: 3
Annie and I worked together at Capital One for three years. For a few months, I was her boss. I oversaw the bank’s “secured card” product—a credit card marketed to people whose credit is so bad they can’t get a credit limit of $300 at a 27 percent interest rate without putting down a security deposit. Ironically, at Capital One, the more of a positive-energy type you were, the more likely it was that you’d work in the subprime division. There, people like Annie and myself reasoned, the choices you made could, hypothetically, make things easier for struggling families. We told ourselves that such families likely didn’t have any better lending options. And for poor, under-banked households, many lending options are far worse than Capital One.

The real question, of course, isn’t whether a credit card with a 27 percent interest rate and a $39 late fee is better than a payday loan. It’s whether Capital One’s marketing campaigns push people into debt who would have otherwise avoided it; whether it is actually in a person’s best interest, desperate though they may be, to borrow money at an exorbitant rate; and whether this enterprise is ethically defensible—in particular, for the decent, hard-working employees who toil every day to make Capital One’s mercenary strategy a reality. Because the ugly truth is that subprime credit is all about profiting from other people’s misery.

Who thinks the only difference between subprime credit companies and loan sharks is that the credit card companies send your debt to collections instead of sending sending Guido to your home...

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No. of Recommendations: 4
I, personally, do NOT think there is anything ethically wrong with subprime lending, or any honest marketing of same.

If Person B is legally and ethically able to accept any contractual offer he likes, then...

...Person A should be legally and ethically able to put forth any contractual offer he likes to Person B.

And it should not be considered Person A's fault if it turns out that Person B decided to accept such offer, regardless of the consequences to Person B.

If you want to get rid of subprime situations (I'm fine with that, I don't really care either way, I'm only discussing ethical fairness here) tell me this: Would you support making it illegal for Person B to accept a subprime offer just as quickly as you might support making it illegal for Person A to put forth a subprime offer?

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If some people can't get sub prime credit from a bank, they will take out a payday loan to get what they want or need instead.

Seattle Pioneer
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No. of Recommendations: 7
If some people can't get sub prime credit from a bank, they will take out a payday loan to get what they want or need instead.


In my previous post I only discussed the ethics of sub-prime lending. Now I'll discuss what I think about it overall.

I'm sick of hearing people whine about it.

You know how it got started? Banks used to NOT lend to poor credit prospects very much. And people whined that it was unfair to minorities. They called it racist. So the government stepped in and MANDATED that a certain percentage of loans (specifically mortgages in this story) be made to minorities. Banks would be punished if they didn't meet the mandated quotas. And, as they weren't getting enough applicants to meet those quotas, they were FORCED to target advertising efforts towards poor credit prospects to bring them in the door, and they were FORCED to give those poor credit prospects loans.

The very predictable result of all that is there is a higher default rate, and a higher percentage of those loan recipients get into trouble.

Then the same type of people who whined about the unfairness, prompting the government interference, and thus CREATING the problem, are now whining about the problem. They BLAME the banks.

My conclusion: Don't entertain whiners who don't have good reasoning skills.

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